08.09.2024. / 11:30
LONDON – The value of the dollar fell last week because it is almost certain that the US central bank will cut interest rates this month, after years of restrictive monetary policy.
Photo: Pixabay
The dollar index, which shows the value of the American dollar against the six most important world currencies, weakened by 0.5 percent, to 101.19 points.
At the same time, the exchange rate of the dollar against the euro slipped by 0.3 percent, so the price of the euro reached 1,1085 dollars.
The American currency also weakened against the Japanese yen, by 2.6 percent, so its exchange rate sank to 142.30 yen. All the latest data show that inflation in the US is weakening, as is the labor market, while economic growth is slowing down.
Because of this, the American central bank opens up space to reduce interest rates, so the dollar is under pressure. After the statements of a number of Fed leaders, it is almost certain that the central bank will reduce interest rates already at its session in September. The only question is for how much.
Most analysts expect interest rates to be cut by 0.25 percentage points, but there are also those who expect a sharper 0.50 percentage point cut. The Japanese yen, on the other hand, strengthened strongly because, due to high inflation in Japan, it is possible that the central bank there will soon further tighten the monetary policy.
The European Central Bank is expected to further reduce interest rates in September, for the second time since June. Almost all data show that inflation in the eurozone is gradually easing, which opens up space for the ECB to cut interest rates. On the other hand, the Eurozone economy is growing slowly, so monetary incentives are necessary. SEEbiz
Source: www.capital.ba
